Aim-listed BlueRock Diamonds has informed the business rescue practitioners (BRPs) governing Kareevlei Mining and its operations - the Kareevlei mine in South Africa - that it would be unable to contribute any additional financing to help recapitalise the operations.
Kareevlei Mining, BlueRock's main operating subsidiary, was placed under business rescue last February due to high debt.
The BRPs had asked that the company, as the largest and controlling stakeholder, provide all or part of R150 million to recapitalise the mine and fund operating capital.
BlueRock said that the BRPs convened their first meeting of creditors on March 13, where they provided comments on the reasons Kareevlei was placed in business rescue by its board of directors.
The board of directors studied and explored the possibilities of the firm raising enough additional funds to fund Kareevlei Mining and has concluded that it is unlikely to be able to do so at this time.
According to the BRPs, Kareevlei's assets are unlikely to generate enough cash to settle the secured creditor, Teichmann South Africa (TSA), in a liquidation scenario.
The BRPs believe Kareevlei Mining can only be saved if its debt is cancelled or reduced to a reasonable level; capital is invested to follow mining licence criteria and improve the plant; working capital finance is provided; and the mine is managed and operated by its owners.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
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